Exclusion not coming down the pipe

An exclusion for water entry through a wall did not apply to water entering from a pipe transecting the wall.

Insurance law – Homeowner’s insurance – Exclusions – Water damage – Contra proferentum rule – Interpretation of policy – Practice – Appeal – Duties and liabilities of insured

904950 Ontario Limited v. Dominion of Canada General Insurance Company, [2025] O.J. No. 424, Ontario Court of Appeal, February 3, 2025, M.H. Tulloch C.J.O, D. Paciocco and I.V.B. Nordheimer JJ.A.

A home insurer appealed a declaration that it was responsible for covering water damage to the insured’s property. The water came from a burst watermain and entered the insured’s property through a pipe transecting the basement walls. The insurer argued that an exclusion clause for water entering through walls applied. The motion judge determined that the exclusion did not apply because the water entered through the pipe, not through the wall itself, and that the term “wall” did not include the pipe. The appeal was dismissed. Walls and pipes serve conflicting functions, with walls preventing passage of fluids, while pipes enable passage. If there was any ambiguity in the policy, contra proferentum would apply in favor of the insured.

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